With new acquisition, Oyo gains ground in Europe

From left: Ritesh Agarwal, founder/group CEO, Oyo Hotels & Homes; Tobias Wann, CEO, @Leisure; and Maninder Gulati, global chief strategy officer, Oyo Hotels & Homes. Photo credit: Oyo Hotels & Homes (Oyo @Leisure Group)

India's Oyo Hotels & Homes is continuing its rapid growth with more new deals. After aligning with Airbnb and forming a joint venture with Tokyo-based SoftBank Corp. and SoftBank Vision Fund to expand in Japan, the company now plans to acquire European vacation-rental company @Leisure Group from Axel Springer, a German media and technology company. The deal is expected to close next month. The purchase price was not disclosed.

@Leisure Group manages more than 30,000 holiday homes, cottages, parks and apartments in more than 300 cities across 13 countries in Europe through brands like Belvilla, DanCenter and Danland. The group’s online marketplace, Traum-Ferienwohnungen, offers a subscription-based, home-management service with more than 85,000 homes across 50 countries. 

The acquisition is set to position Oyo as a "world-leading holiday homes manager" with more than 115,000 fully managed holiday homes from Spain up to Norway.

"With this acquisition, we are now a step closer to become the largest hospitality brand in the world," the company wrote on its official blog. "Our focus, however, will remain to be the most preferred hospitality brand with the mission to create a perfect space in every place."

Speaking to Phocuswright, Oyo Global Chief Strategy Officer Maninder Gulati noted Europe is "spearheading" the vacation and urban home-rental trend globally, boosting its appeal for the rapidly growing company. "@Leisure Group is uniquely positioned to capitalize on its experience and insights aided with Oyo’s full-stack approach towards building the world’s largest global vacation rentals business," said Gulati.

Three Reasons Why

The company listed three reasons for the acquisition, which it described as "closely aligned with our overall mission.":

First, more than 100 million homes are available worldwide for short- and long-term rentals for an estimated total value of more than $2 trillion. Europe is the largest market with 30 percent-40 percent of vacation rentals and urban homes. This gives us a perfect opportunity to capitalize on the size and the scale of the vacation rental for our Homes business;
Second, @Leisure Group has an Oyo-like approach to vacation-rentals management, with deep data-driven capabilities in revenue management, homeowner engagement and property management services; 

Third, the company's management team, led by Tobias Wann, has a growth-driven mindset grounded in financial discipline and prudence, which is evident in the profitable growth of the business historically.

 Wann is slated to become CEO for vacation homes at Oyo Global.
Oyo Homes was launched in 2017 and now manages 45,000 private homes and villas worldwide. In March, Ritesh Agarwal, Oyo's 25-year-old founder/CEO, shared plans with regional financial site Nikkei Asian Review of the company's plans to overtake Marriott International as the world's largest hotel operator, and plans to accomplish this in fewer than four years. If the company achieves the goal of a million rooms by 2020, it would need to add 300,000 rooms by 2023 to surpass Marriott's current total of 1.29 million rooms. Last September, Agarwal told Reuters he planned to spend $53 million to launch the company in 10 British cities by March 2020 via a smartphone-based service for franchise owners and guests. Agarwal said his company will select hotels from among Britain’s 35,000-40,000 independent operators, offering redesign, property management and marketing to help them compete. “By focusing on the customer and small-asset owners, we tend to out-compete some of our more traditional hotel-chain rivals,” said Agarwal.

The @Leisure Group deal could help Oyo catch up to the megachains. "This acquisition will combine the @Leisure Group’s knowledge and proven expertise of managing vacation rentals with our capabilities of asset management and technology," the company wrote on its blog.